When you have decided the structure that the business will operate under you can register your chosen business name. Bill Shew, a partner with business consultancy Grant Thornton, says small businesses are often ignorant of their administrative responsibilities. This can cause serious problems, even resulting in fines or worse.
The importance of paperwork
‘I see lots of start-ups that don’t understand their regulatory responsibilities. You have to think about not just paying tax, but whether you are registered to pay tax. You also have to keep detailed records – not just throw receipts into a shoe box – and pay staff super on time. Admin issues can be where people really fall over,’ he says.
What a name means legally
It’s important to know the business structure you will be using because the structure affects the way the business name is registered.
A business name can be set up in two ways. If you choose to operate your business as a company, you will need to register your business as a company with the Australian Securities and Investments Commission (go to
www.asic.gov.au to download and submit your application). This process means no one can operate under your business name anywhere in Australia.
How to register a business name
But if you are not operating your business as a company, instead of registering the business with ASIC you will need to register the business name with your state’s consumer affairs body.
In NSW, this is the Department of Fair Trading at
www.fairtrading.nsw.gov.au or on (02) 9895 0111.
In Victoria, contact Consumer Affairs Victoria at
www.consumer.vic.gov.au or on 1300 36 16 73.
In Queensland, contact the Office of Fair Trading at
www.consumer.qld.gov.au or on (07) 3246 1581.
In South Australia, contact the Office of Consumer and Business Affairs at
www.ocba.sa.gov.au or on 1300 138 918.
In Tasmania contact the Department of Corporate Affairs at
www.consumer.tas.gov.au/business_affairs or on (03) 6233 2225.
In Western Australia, contact the Department of Consumer and Employment Protection at
www.docep.wa.gov.au or on (08) 9426 1222.
In Canberra, it’s the Registrar General’s Office at
www.rgo.act.gov.au or on (02) 6207 0490.
In the Northern Territory contact the Department of Justice at
www.nt.gov.au/justice or on (08) 8982 1700.
The cost to register a business name varies from state to state. In 2007 in NSW this fee is $142 and in Victoria it is $77.10 (as at October 2007).
The laws about registering a business name also vary between state to state, so please check with your adviser or with the relevant state authority to find out more details.
Shew says ‘ABC Carpentry can exist in every state, but if you have a Pty Ltd company name, ABC Carpentry Pty Ltd, for example, no one can set up that business name in another state. But the authorities might allow a different business to register ABC Carpentry Victoria.’
For a business that does not want to operate as a company, it is possible to register the same name in every state, although this might be time consuming and cost about the same as it would to set up a company.
A matter of balance
When deciding how to register your business name, you need to balance the additional administrative requirements that come with operating as a company, with your need to protect your trading name nationally.
If you only want to operate a small business in your own state, registering your business name with your relevant state authority might be appropriate. But if you have your sights set on the national horizon, you may want to consider incorporating for the additional protection benefits it offers your trading name.
A key step to undertake when choosing a business name is to make sure no-one else is trading under that business name. You do this by checking the National Names Index at the ASIC website,
www.asic.gov.au. You can also do an identical names check at the site.
Australian Business Number
Every business operating in Australia also needs to register for an Australian Business Number (go to
www.ato.gov.au).
Tax and Superannuation
Businesses that earn more than $75,000 per annum must also be registered to pay the Goods and Services Tax. Businesses that earn less than this amount can still register to pay GST, and many advisers suggest doing so because the income of most businesses will exceed the threshold at some point, even if income is less than this initially.
‘Be prepared to put money aside to pay GST and tax – one-eleventh of everything you earn is generally GST,’ Shew says.
A business with employees will also have to register for Pay as You Go Tax (PAYG) at the ATO’s website. At the same time, it’s worth researching and selecting a superannuation fund for your employees, although these days most people have their own fund. It’s unlikely a start up will need to register for payroll tax, as this only applies to businesses with large turnovers, usually in excess of $1 million. Rules about payroll tax vary from state to state, so check with your local authority to make sure you know the rules, and consider your total wage payments including fringe benefits tax payments, contractor payments and maternity payments when assessing whether payroll tax applies to you.
‘You really need to be ready for your administrative responsibilities around employees,’ Daniels says, recommending MYOB and Quicken Books as two software packages that have good payroll systems.
Many companies will also need to consider other licences and registrations, for example environmental licences.
Trademarks
If you have developed a logo and marketing identity for your business, advisers recommend trademarking this name. It’s possible to do this yourself at
www.ipaustralia.gov.au. You can also apply for patents at this site, although it’s usual to retain a lawyer when registering a patent.
‘Clients underestimate the value of their brand; they should maximise and protect this asset,’ Daniels says.
Codes of Practice
Business operators also need to be aware of any codes of practice governing their industry. It’s also advisable to apply for membership of your relevant industry body.
Internet Domain Name
Another important registration is your domain name. ‘You see businesses with Gmail or Hotmail email accounts, but it gives a much better image if you have your own domain, which you can get for as low as $15 a month,’ Daniels says.
Check with any of the international domain name searches on the internet to ensure your business name is available as a domain name. And do this before you register the name with ASIC or your local authority.